BNZ currency strategist Raiko Shareef said in a report the New Zealand dollar was bearish but no basket case.
The kiwi yesterday regained some of the ground it lost after the Reserve Bank's announcement last week the next change in the official cash rate could be up or down.
The dollar was trading at US74.22 at 8am and at US74.35c at 5pm.
Mr Shareef said the wide-ranging nature of Reserve Bank governor Graeme Wheeler's speech would mean the market would no longer be blinkered, jumping solely on soft inflation data.
It would at least pay some mind to still-robust domestic data.
Last week's employment data was a case in point.
The overall employment rate rose from 65.3% to 65.7%, near all time highs.
''From here, we expect the New Zealand dollar to shed its underperformer status it gained on rate cut speculation.
"There remains room for near-term cuts to be priced out. Local data tone is expected to remain firm.''
Next week, quarterly retail sales figures were expected to reflect a ''solid'' 1.2% quarter-on-quarter rise for December following a ''bumper'' 1.5% rise in September, he said.
The BNZ had cooled on the idea of re-entering a short New Zealand dollar-US dollar position, having taken a tidy profit from US79.18c to US74.75c.
''We are wary of a possible consolidation in the broader US dollar. We would consider entering another short position above US75c but are wary ahead of Federal Reserve chairwoman Janet Yellen's semi-annual testimony to Congress, due by the end of February.''
In all likelihood, Dr Yellen would affirm the consistent message from Fed speakers of late: a mid-2015 lift in interest rates seemed reasonable.
But there could be an ugly US dollar sell-off should she signal some misgivings about global growth or US dollar strength, Mr Shareef said.
There appeared to be a clear distinction between what the currency and interest rate markets were signalling.
The BNZ believed the US dollar was already pricing in the prospect of a mid-2015 rate hike while interest rate markets were yet to catch up.
Mr Shareef remained constructive on the US dollar, rather than getting overly bullish at current levels.
BNZ economists had joined their National Australia Bank colleagues in lowering their near-term Australian dollar forecasts across the board.
The previous forecasts were hit well before time.
In light of the rate cut, NAB's expectation of another in 2015 and a poor terms of trade outlook, the Australian dollar was now picked to hit US74c at the end of the year.
As a result, the BNZ forecast for the NZ dollar-Australian dollar cross was higher with A95c picked for the end of year.
''We see the cross trading at a wide range around the mid-90 cents but remain extremely sceptical parity will be hit.''
